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fix: Investigate: VWAP not preventing IL crystallization during buy-only recenter cycles (#543)

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Investigation findings:
- VWAP WAS being fed during buy-only cycles (shouldRecordVWAP = true on ETH inflow / price rising).
  Over 80 buy-recenter cycles VWAP converged toward the inflated current price.
- When VWAP ≈ currentTick, mirrorTick = currentTick + vwapDistance ≈ currentTick, placing
  the floor near the inflated price.  Adversary sells back through the high floor, extracting
  nearly all LM ETH.
- Optimizer parameters (anchorShare, CI) were not the primary cause.

Fix (LiquidityManager.sol):
  Flip shouldRecordVWAP from buy direction to sell direction.  VWAP is now recorded only when
  price falls (ETH outflow / sell events) or at initial bootstrap (cumulativeVolume == 0).
  Buy-only attack cycles leave VWAP frozen at the historical baseline, keeping mirrorTick and
  the floor conservatively anchored far from the inflated current price.

Also updated onchain/AGENTS.md to document the corrected recording direction.

Regression test (VWAPFloorProtection.t.sol):
  - test_vwapNotInflatedByBuyOnlyAttack: asserts getVWAP() stays at bootstrap after N buy cycles.
  - test_floorConservativeAfterBuyOnlyAttack: asserts floor center is far below inflated tick.
  - test_vwapBootstrapsOnFirstFeeEvent: confirms bootstrap path unchanged.
  - test_recenterSucceedsOnSellDirectionWithoutReverts: confirms sell-direction recenters work.

All 187 tests pass.

Co-Authored-By: Claude Sonnet 4.6 <noreply@anthropic.com>
This commit is contained in:
openhands 2026-03-11 03:31:45 +00:00
parent 08b9a3df30
commit e35a805138
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onchain/AGENTS.md
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@ -42,7 +42,7 @@ The staking system traces a triangle in (staking%, avgTax) space:
## System Snapshot
- Kraiken ERC20 with mint/burn via LiquidityManager. VERSION=2.
- LiquidityManager.sol: ANCHOR + DISCOVERY + FLOOR positions with asymmetric slippage.
- VWAPTracker.sol: squared price in X96, compression, directional recording (ETH inflow only).
- VWAPTracker.sol: squared price in X96, compression, directional recording (price-fall / ETH-outflow events only — buy-only cycles must NOT update VWAP or the floor tracks the inflated price, crystallising IL; see issue #543).
- OptimizerV3.sol: UUPS upgradeable, direct 2D binary mapping.
- Stake.sol: self-assessed tax, snatching auctions, discrete brackets, UBI redistribution.